Grindrod Shipping, a global provider of maritime transportation services predominantly in the drybulk sector, announced its earnings results for the three months ended March 31, 2023.

Financial Highlights for the Three Months Ended March 31, 2023

• Revenues of $76.8 million
• Gross profit of $7.0 million
• Loss for the period and attributable to owners of the Company of $4.3 million, or $0.22 per ordinary share
• Adjusted net loss of $4.3 million, or $0.22 per ordinary share(1)
• Adjusted EBITDA of $15.7 million(1)
• Handysize and supramax/ultramax TCE per day of $9,491 and $12,869, respectively(1)

(1) Adjusted EBITDA, Adjusted net income/(loss) and TCE per day are non-GAAP financial measures. For the definitions of these non-GAAP financial measures and the reconciliation of these measures to the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the definitions and reconciliations in “Non-GAAP Financial Measures” at the end of this press release.

Operational & Corporate Highlights for the Three Months Ended March 31, 2023

• On March 3, 2023, we entered into a contract to sell the 2010-built handysize bulk carrier, IVS Sentosa, for $10.9 million (before costs) with delivery to her new owners on April 6, 2023.
• On March 16, 2023, we delivered the 2015-built ultramax bulk carrier, IVS Hirono, to her new owners.
• On March 21, 2023, we agreed to extend the long-term charter on the 2014-built supramax bulk carrier, IVS Crimson Creek, for a period of 11 to 14 months commencing March 11, 2023.
• On March 22, 2023, we entered into a contract to sell the 2015-built ultramax bulk carrier, IVS Pinehurst, for $23.2 million (before costs) with delivery to her new owners on May 3, 2023.
• On March 23, 2023, we entered into a contract to sell the 2014-built handysize bulk carrier, IVS Kestrel, for $17.3 million (before costs) with delivery to her new owners planned on or about May 31, 2023.
• On March 31, 2023, Mr. Stephen Griffiths retired from the Company as Interim Chief Executive Officer and Chief Financial Officer and relinquished his position on the Board of Directors. Mr. Edward Buttery was appointed as Chief Executive Officer and Mrs. Deborah Davel as Chief Financial Officer, effective April 1, 2023.
• On March 31, 2023, Mr. Quah Ban Huat and Mr. John Herholdt retired as Directors of the Company and retired as Chairman of the Audit and Risk Committee and Chairman of Compensation and Nomination Committee respectively. The Board appointed Mr. Gordon French as an independent, Non-Executive Director and Chairman of the Audit and Risk Committee effective April 1, 2023 and Mr. Cullen Schaar was appointed as the Chairman of the Compensation and Nomination Committee effective on April 1, 2023.              

Recent Developments

• On April 6, 2023, we delivered the 2010-built handysize bulk carrier, IVS Sentosa, to her new owners.
• On May 3, 2023, we delivered the 2015-built ultramax bulk carrier, IVS Pinehurst, to her new owners.            
• On May 17, 2023, the Company’s Board of Directors declared an interim quarterly cash dividend of $0.03 per ordinary share, payable on or about June 19, 2023, to all shareholders of record as of June 9, 2023 (the “Record Date”). As of May 17, 2023, there were 19,472,008 common shares of the Company outstanding.
• In view of the Record Date of June 9, 2023, shareholders may not reposition shares between the JSE and the U.S. Register during the period from June 8, 2023, at 9.00 a.m. (South African time) until June 10, 2023, at 9.00 a.m. (South African time).
• As of May 10, 2023, we have contracted the following TCE per day for the second quarter of 2023 (1):
  • Handysize: approximately 992 operating days(2) at an average TCE per day of approximately $11,439
  • Supramax/ultramax: approximately 992 operating days(2) at an average TCE per day of approximately $16,114

(1) TCE per day is a non-GAAP financial measure. For the definition of this non-GAAP financial measure and the reconciliation of this measure to the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the definitions and reconciliations in “Non-GAAP Financial Measures” at the end of this press release.

(2) Operating days: the number of available days in the relevant period a vessel is controlled by us after subtracting the aggregate number of days that the vessel is off-hire due to a reason other than scheduled drydocking and special surveys, including unforeseen circumstances. We use operating days to measure the aggregate number of days in a relevant period during which vessels are actually available to generate revenue.

CEO Commentary

Edward Buttery, the Chief Executive Officer, commented:

“During the quarter, we contracted three more ship sales, in line with our commitment to reduce debt. Charter rates decreased given the seasonally weak start to the year, compounded by a particularly early Chinese New Year. If the market strengthens, as we anticipate it will in the lead up to summer, then we will look to increase cover on a portion of the fleet. In my short time as CEO of TMI and Grindrod I am delighted with the cooperation between both companies and I’m confident there is significant room to improve margins once the integration of our business and operations is complete.”

Unaudited Results for the Three Months Ended March 31, 2023 and 2022

Revenue was $76.8 million for the three months ended March 31, 2023 and $110.3 million for the three months ended March 31, 2022. Vessel revenue was $52.8 million for the three months ended March 31, 2023 and $110.2 million for the three months ended March 31, 2022. Revenue decreased due to weakening market conditions in the drybulk business and a reduction in short-term operating days that was partially offset by the revenue generated from the sale of a supramax/ultramax vessel in the first quarter of 2023 with no corresponding sale in the first quarter of 2022. Short-term operating days decreased due to the redelivery of the short-term vessels due to reduced demand for drybulk tonnage brought about by a global slowdown in GDP growth and higher interest rates.

Our handysize total revenue and supramax/ultramax total revenue was $20.2 million and $56.5 million, respectively, for the three months ended March 31, 2023, and $36.2 million and $72.7 million, respectively, for the three months ended March 31, 2022. Handysize vessel revenue and supramax/ultramax vessel revenue was $20.2 million and $32.6 million, respectively, for the three months ended March 31, 2023, and $36.2 million and $72.7 million, respectively, for the three months ended March 31, 2022. The results for the three months ended March 31, 2023 were negatively impacted by weaker spot markets and a reduction in short-term operating days which was partially offset by the sale of a supramax/ultramax vessel in the first quarter of 2023 with no corresponding sale in the first quarter of 2022.

Handysize TCE per day was $9,491 per day for the three months ended March 31, 2023 and $22,201 per day for the three months ended March 31, 2022. Supramax/ultramax TCE per day was $12,869 per day for the three months ended March 31, 2023 and $24,385 per day for the three months ended March 31, 2022.

Cost of sales was $69.8 million for the three months ended March 31, 2023 and $69.6 million for the three months ended March 31, 2022. The increased costs due to the sale of a supramax/ultramax drybulk carrier in the first quarter of 2023 which was offset by a decrease in voyage expenses and charter hire expenses due to the redelivery of vessels that were chartered-in for a short-term period.

Our handysize segment and supramax/ultramax segment cost of sales was $19.6 million and $51.0 million, respectively, for the three months ended March 31, 2023 and $20.4 million and $49.5 million, respectively, for the three months ended March 31, 2022.

Handysize voyage expenses and supramax/ultramax voyage expenses were $6.7 million and $11.2 million, respectively, for the three months ended March 31, 2023 and $5.3 million and $18.4 million, respectively, for the three months ended March 31, 2022. Handysize charter hire expense and supramax/ultramax charter hire expense were $1.0 million and $3.2 million, respectively, for the three months ended March 31, 2023 and $1.3 million and $14.7 million, respectively, for the three months ended March 31, 2022. Handysize vessel operating costs and supramax/ultramax vessel operating costs were $8.0 million and $4.9 million, respectively, for the three months ended March 31, 2023, and $7.7 million and $4.5 million, respectively, for the three months ended March 31, 2022. Handysize vessel operating costs per day were $5,950 per day for the three months ended March 31, 2023 and $5,677 per day for the three months ended March 31, 2022. Vessel operating costs per day were higher in the handysize drybulk carrier segment for the three months ended March 31, 2023 in comparison to the three months ended March 31, 2022 due to increased repairs on certain of the older vessels and the increased costs of lubricating oil. Supramax/ultramax vessel operating costs per day remained relatively flat at $5,583 per day for the three months ended March 31, 2023 and $5,540 per day for the three months ended March 31, 2022.

During the three months ended March 31, 2023, out of 1,667 operating days in the supramax/ultramax segment, 86.0% were fulfilled with owned/long-term chartered-in vessels and the remaining 14.0% with short-term chartered-in vessels compared to 2,229 operating days in the supramax/ultramax segment, 64.0% were fulfilled with owned/long-term chartered-in vessels and the remaining 36.0% with short-term chartered-in vessels for the three months ended March 31, 2022.

Gross profit was $7.0 million for the three months ended March 31, 2023 and $40.7 million for the three months ended March 31, 2022.

Other operating expense was $0.1 million for the three months ended March 31, 2023 and $0.3 million for the three months ended March 31, 2022.

Administrative expense was $7.0 million for the three months ended March 31, 2023 and $8.3 million for the three months ended March 31, 2022. The decrease was due to a reduced staff incentive accrual and no accrual for the forfeitable share incentive scheme due to the settlement and termination of the scheme in December 2022, which was partially offset by increased travel expenses and increased insurance costs due to the additional takeover and merger run-off insurance for directors and officers following the TMI transaction in December 2022.

Interest income was $0.4 million for the three months ended March 31, 2023 and $0.1 million for the three months ended March 31, 2022.

Interest expense was $4.5 million for the three months ended March 31, 2023 and $3.1 million for the three months ended March 31, 2022. The increase is primarily due to the increase in interest rates.

Income tax expense was $0.1 million for the three months ended March 31, 2023 and $0.1 million for the three months ended March 31, 2022.

Loss for the three months ended March 31, 2023 was $4.3 million compared to a profit of $29.0 million for the three months ended March 31, 2022.

Net cash flows generated from operating activities was $27.8 million for the three months ended March 31, 2023 and $28.5 million for the three months ended March 31, 2022. Net cash utilised in investing activities was $0.1 million for the three months ended March 31, 2023 and $0.0 million for the three months ended March 31, 2022. Net cash flows used in financing activities was $28.0 million for the three months ended March 31, 2023 and $29.7 million for the three months ended March 31, 2022.

As of March 31, 2023, we had cash and cash equivalents of $46.1 million and restricted cash of $10.1 million.